Category Archives: Logistics

So, you want to strike out on your own and become an owner-operator. In part one of our series, we took a look at all of the personal considerations you have to ponder before making that decision. In this week’s installment, we’re going to take a look at the second – and dare we say just as crucial – factor: The financial considerations.

Because the fact is while becoming a truck driver is a rewarding and potentially lucrative career, you’ve got to make sure the dollar signs are backing you up. Running your own business, no matter what it is, isn’t cheap. Making sure you’re financially prepared is the key determinant behind whether or not your business succeeds. Let’s take a closer look.

Financial Assessment

Let’s face it: The financial aspect of our existence impacts every part of our life, and the trucking profession is no different. How you manage your money – and how much of it you have – are critical components to running a successful business as an owner-operator.

To make sure you are realistically ready to move into full-fledged ownership, you’ve got to do a careful examination of your financial house. Is it in order?

Consider the following:

Budget: For most of us the word “budget” means how do we spend our last expendable $20 three days before payday, yet if you want to become an owner-operator, you’ve got to think about it in much bigger terms. Your budget includes your entire financial lifestyle – if you will. You need to have an excellent handle on all of your income, expenses, assets and liabilities before you make the decision to go out and spend six figures on a large commercial vehicle.

Debt: The fact is if you want to have access to credit, you’ve got to eliminate any excessive debt. Setting yourself up as an owner-operator will be very challenging if you’re carrying around a huge saddleback of excessive debt. Eliminate most of your credit card debt. By doing so, not only will you improve your credit outlook, but you will set yourself up for a pretty bottom line once you get started.

Emergency fund: Having an emergency or rainy day fund is wise no matter where you live or what industry you work in. What will you do if you have a major financial emergency or fall ill? You’ve got to have at least 3 to 6 months of living expenses at the ready at any given moment, and that is probably a low number. After all, how will you keep your trucking business afloat if you don’t even have enough money to cover your personal expenses?

Disability insurance: Although some may think this is a small matter that can easily be shelved, ensuring you have comprehensive disability insurance is very important. If you get sick or injure yourself, you will need cold hard cash for everyday expenses. Furthermore, how will you make your truck payment? Remember, 3 to 6 months of living expenses may not be enough, so what will you rely on once your emergency fund runs out?

Life insurance: Sure, it’s not easy to talk about, but that doesn’t mean we shouldn’t be talking about it. If you have dependents or other financial commitments, you need to have life insurance in place to ensure those debts are paid in case the worst happens. Term life insurance is usually quite cheap and is far less expensive than signing up for credit life insurance on your truck loan.

Admittedly, there are other financial factors you must consider, but these are the most important. Making sure your financial house in order is absolutely necessary to succeeding as an owner-operator.

So what’s next, you ask? Join us in our next installment when we discuss the third consideration in striking out as an owner-operator: The equipment assessment.

It appears 2014 was the best year for the supply chain since the recession ended. The transportation sector grew by 3.6 percent over the course of the year.

The primary growth driver was not higher rates, but rather stronger shipment volumes. Even so, the truck driver shortage continues to be a thorn in the side of the logistics sector.

Data Sources

All of this information was contained in the Council of Supply Chain Management Professionals’ 26th Annual State of Logistics Report. The report is designed to provide an overview of the economy’s overall performance over the prior year. It also discloses total logistics costs for the prior year and discusses transport trends.

For 2014, the report shows that business logistics costs rose to $1.45 trillion. This represents a 3.1 increase over the prior year. The logistics cost growth was lower, however than the growth rate of nation’s overall GDP.

Overall, the report shows the U.S. economy was on much firmer ground last year. The sector saw consistent creation of new jobs, a slight increase in real net income and household net worth, low levels of inflation and reduced gasoline prices.

Rising Tides

As they say, “A rising tide lifts all boats.” As consumer spending has increased, freight levels have climbed and retailers are replenishing inventories. Consumers – the vital missing piece since the recession – have been the missing link, until now.

The general freight pattern in 2014 was quite obvious. According to the report, freight shipment volume has been following a similar trend, year-over-year. It looks like a bell curve, rising in the middle and falling back to prior year’s levels towards the end of the year.

February of 2014 saw the trend begin to climb upward. Things continued getting better throughout the second quarter, with freight payments in April hitting a 15 year high. April shipment volume also reached its highest point since June of 2011.

High Utilization

It’s also important to note that during this time, trucking got ever closer to the 100 percent utilization mark. In 2014, truck capacity was extremely tight. The demand for spot-market truck capacity also ran high over the same period.

Even more telling, May of last year saw freight payments come in 11.2% higher than during the same period in 2013. They were a whopping 77 percent higher than at the end of the recession in 2009.

In what may be a surprise to some, rates held steady despite the tightening capacity. Both the number of total shipments and the amount of freight reached a height in June, with summer shipments even reaching pre-recession November 2007 levels.

In fact, during the first half of 2014, the freight sector was quite a bit stronger than many other parts of the economy. The report found that trucking increased 3 percent over the year. The intercity segment rose 2.7 percent and local segment 3.7 percent. Although the number of trucks overall declined, total truck tonnage increased by 3.5 percent.

Shippers Beware

The data supports what many have been saying: Loads are heavier and there are more trailers at or near full capacity. Total freight payments rose less than the number of shipments, meaning rates were competitive over the year.

While spot market prices moved up and down, an indication of intermittent capacity problems, rates did not rise as the traditional supply-and-demand model would indicate. Even so, there was a 2.5 percent increase in the cost per ton-mile basis. Conversely, on a cost-per-mile basis, there was a 2.1 percent decline.

Although rates remained relatively flat, this doesn’t mean shippers shouldn’t beware. Trucking shortages allow carriers to be very selective in who they choose to do business with. As they attempt to recruit and retain truck drivers, trucking companies are interested in maximizing driver pay and satisfaction.

Shippers who hold drivers for extended durations as they wait to load or unload will fall to the bottom of the line. Carriers are looking for maximum equipment utilization, faster turnaround times, and fewer empty trailers. Shippers who are able to work with carriers to accomplish this task will fare better than those who don’t.

As long as transportation existed, logistic was a necessary tool. What goes where was the key question for any transportation operation, no matter if it included ox carts with a villager following road signs or newest long haul trucks equipped with GPS and other contemporary navigation methods. But somehow, the logistic part of the transportation often gets the back seat when we imagine this business. At best, we will picture a person in the office making calls and forwarding them to drivers in the field, doing work that is similar to an old fashion telephone switchboard operator. At worst, we might imagine a guy in some crummy basement organizing shifts for his drivers and doing next to nothing.

But, the reality is quite different. The logistics of every operation in the world are becoming more and more important. Trucking logistics may just be one of those professional fields that will experience a phenomenal growth in the years to come, and it will produce new job openings and bigger incomes.

In today’s world, a business that is run efficiently is a business that survives and thrives. The days of cheap fuel are long gone, and the future brings the prospect of a similar trend; energy that is needed for transport will become more expensive, and automatically the costs of trucking companies will rise. Now imagine a logistic officer in charge of a team that is able to streamline trucking routs and bring a decrease in fuel consumption for, let’s say, 5% on a monthly base. This meager 5% could pay the salaries for the entire team and still save extra money for the business. In this scenario, a top-notch logistic team is not an added bonus; it’s an indispensable part of the operation. Also, have in mind that lower fuel consumption means a smaller carbon footprint, which in turn means good news for the environment and the wider community.

And this is not some distant future. Countries like Germany, where significant public and corporate awareness of environmental issues, combined with a great appreciation of efficiency already gave rise to a big number of logistics companies. These small businesses, usually operated by a single digit group of people get hired as consultants for other, bigger companies that want a more productive transportation process. With the modern communication technologies like GPS tracking, computer models of traffic congestion and road accessibility predictions, the job of trucking logistics becomes a very desirable option for a stable employment in the transportation industry.

The best thing about this job opportunity is the fact that great logistics require not only a solid education, but more importantly, a dedicated and analytically oriented mind. This work asks for patience and the ability to follow leads and see where they take you. Trucking logistics may involve interviewing the drives to understand their habits and get their opinions, or it may include long hours of checking traffic information and then testing different models to find those that will give the best results. In any case, trucking logistics demands dedication and hard work.

If you are ready to give exactly that, think about a career in trucking logistics. It may be the perfect job in the trucking business of the future.

When it comes to trucking, this specific and sui generis delicate type of business, you can expect that its managing needs are satisfied of the same operations and processes like other business, but shaped through its own prism. One of these essential processes is trucking logistic, which deals with the planning of trucking activity and the research of trucking operations. While the manufacturing businesses expect from their logistics departments to optimize a certain product to perfection and meet all the needs of the customers, the trucking logistics has other responsibilities and features. In short, it is all about analyzing and taking into consideration every single factor that is involved in the transportation of goods so that the process can be improved and optimized to the highest possible level. You can find out more about the main aspects of logistics for trucking companies below.

Routes Planning

The best way to cut on unnecessary expenses and to increase the speed of delivery is to choose the most appropriate routes for a particular task. ‘The most appropriate’, however, does not usually mean the shortest or the fastest. Sometimes the essence of the cargo requires using routes that are slower and longer, but safer. It is important to take into consideration the road conditions, the traffic, the weather etc. when planning the route – it is no use reaching the final destination earlier if the 10,000 wine glasses you are transporting have turned into salt. On the other hand, when there is no risk for the cargo, it is far better taking a route that is 70 miles shorter and saving time and fuel than going the long route just because you haven’t spent some time researching and planning. And yet, if this particular route is dangerous during bad weather and a storm is forming out, better take the long one… Hopefully, these simple examples have given you the idea about the complexity of routes planning and its relation to trucking logistics.

Fuel Selection

Another way to optimize your expenses and improve your company’s productivity is the proper selection of fuels. A company that employs advanced trucking logistics is bound to follow the market trends with regards to fuels and make sure its trucks use the best option. Again, the cheapest does not mean the best, because with fuels there are other factors, too. For example, cheaper fuel may last for less miles, which would make it more expensive in the long run. Moreover, it is a duty of every modern company to employ and promote sustainability and to be ‘green’, which means that sometimes you will want to go for the more expensive fuel that is less dangerous for the environment. Just like with the routes planning, there are various factors to be taken in consideration when choosing the right fuel and cost is only one of them.

Trucks-Cargo Matching

Another aspect of logistics for trucking companies is the ability to select the right trucks for a given task. Choosing appropriately is bound to improve productivity and help company management by lowering fuel expenses, increasing availability and optimizing speed. Of course, a logical solution for a small task would be a small truck, but the case may be different if you find large cargo for the way back – then sending a big truck would be, of course, wiser. Matching the right truck with the cargo can be very tricky because it depends on a lot of variables, but with a really good logistics teams and some luck everything is bound to go well.

Hiring Employees

Of course, the backbone of every trucking company are the drivers, but still, the management, the accountants, the logistics team and the administration are all vital for the success of the business. That’s why a trucking company should pay careful attention when hiring new staffs – both drivers and office employees. Good education, experience and creativity are a must for every trucking business that aims to grow and expand. Sometimes, it may be necessary for a trucking company to start its own trucking school, to train its prospective employees or to organize seminars, workshops and team building session. All this can only contribute to the improved production of the trucking company.

Who Deals with Trucking Logistics?

Usually, there are two options – having your own logistics team or outsourcing this task to third-party logistics companies. The first option – hiring employees that will focus on your trucking company only and will make sure everything is up to the level – is the best idea for big trucking companies that have constant needs of information, analysis, research and optimization. For those who need only basic logistics services, third-party companies would also be a choice. However, make sure you check the terms and conditions before, as you may have to be really patient and allow a couple of days for response, customer services etc. Whichever option you choose, however, make sure you find experienced specialists that are familiar with trucking and the relevant laws – the productivity and efficiency of your trucking company depends pretty much on those who carry out your logistics operations.

To conclude, trucking logistics is not something that should be estimated and done pro forma by the trucking companies. It is a process or a series of processes that will help your business grow and develop, your management to get organised, your trucks schedule to be seamless and your team to always be immaculate. Meanwhile, trucking logistics will help you lower the expenses, thus increasing your revenue. Knowing all this, you would certainly want to have a good logistics team, wouldn’t you?

When it comes to freight forwarding, everyone knows that both speed and efficiency are necessary if you are to run a profitable business. These are not the only necessary aspects of it all. Others include virtues such as reliability and proper customer service. Qualities that would make any client want to do business with a certain firm. The difference between most local firms and many freight forwarding companies is that freight forwarding companies deal with the world as its market place. This means that there are different time zone issues to think about, different taxes, rules, regulations and such and most of all, different languages and cultural scenarios to navigate.

Owning a freight forwarding company can be a very lucrative business, but in today’s free market environment, you need to be the best. You need to stand out from all the other companies that offer the same services. With the advent of online businesses, and technological advances, the world is a much smaller place now. Long gone are the days when people only knew of one brand that catered to a certain specific niche like freight forwarding. Today there are tons of options both on and offline. This means that the competition is fiercer. In order to stand out, you need to do something a little extra. Below are tips to make your freight forwarding company distinct among competitors.

Be technologically sound

This is one of the main facilitators when it comes to achieving efficiency. You need to employ the most effective, if not the latest, management software available in the market today. There are quite a number of options to choose from. Your choice will depend on the size of your organization, your budget and how tech-savvy you are. Some of the most reviewed logistics software systems include: URoute, JDA Software, AdvanatageTMS, AMT and Epicor. The choices are seemingly endless. But what you need is software that can be customized to your organizations specification and needs. Having the most effective technological power will propel you to the top of the pile in very little time. Technology, when utilized in the right way, means that your company will not only be efficient, it will also be reliable, secure and highly punctual. Which are some of the things that most people look for when going for a freight forwarding company? You do not want to say you have overnight delivery only to take two weeks on the road.

Pristine packing

This is one of the areas that plague most freight forwarding companies. Most of the goods forwarded will most likely be handled by a number of people and machines before they get to their destination. This means that, unless they are packed right, the goods are liable to getting destroyed, scuffed or even lost. With the right kind of packing, you can preserve fragile materials, keep your clients’ privacy as well as make sure that the items get to the intended receiver in the condition that it was originally sent. No one will want to use a company that destroys the goods they intend to ship.

Accurate tracking

When a client ships an item, they need to know how far along in the process it is. This calls for top of the line tracking. Being able to show your clients the progress of their shipment not only elicits trust from them, but it can also go to demonstrating how effective your forwarding company is. You therefore have to employ the most effective and accurate tracking technique at your disposal. The channels and networks should be streamlined so as to provide the client with peace of mind.

Pricing

You have to be competitive, and you have to stay afloat. These two aspects rarely complement each other without one taking a nose dive. In order to gain a bigger share of the market, your prices have to be pocket friendly. Either that or you have to provide the most outstanding service possible so that people would be happy to pay whatever your asking price is. But the best option is to always find a balance between making a profit and being competitive within the market. You could always employ the best technology and most efficient forwarding methods so as to avoid unnecessary overheads and expenses.

These are just some simple tips that will make your freight forwarding company distinct. It is all about good service delivery and intense customer service.